By Greg Rushford
Monday, May 23, Washington, D.C. —Air Force One touched down yesterday evening in Hanoi. The White House and influential Washington think-tank scholars are spinning President Barack Obama’s three-day Vietnam visit as a “legacy” moment, validating the president’s “pivot” to Asia. Expect much warm talk of how America is forging ever-closer economic- and security ties with a modernizing Vietnam. Expect the usual heartwarming television images of happy people —including peasants toiling in lush rice fields, wearing their iconic conical hats.
Don’t expect any admissions from Vietnamese Communist leaders of the suffering they continue to inflict upon some of their country’s best citizens. As former prisoner of conscience Cu Huy Ha Vu rightly notes, today’s Vietnam is “a kleptocracy.” Intrepid pro-democracy advocates stand in the way.
Courageous men like Dang Xuan Dieu, Ho Duc Hoa, and Tran Vu Anh Binh, three of Vietnam’s 100-plus current political prisoners. They languish behind bars, while some Washington insiders have averted their eyes.
Some of those insiders are Southeast Asian analysts who work inside the gleaming $100 million headquarters of the Center for Strategic and International Studies, just a few minutes from the White House — and who have undisclosed sidelines as business consultants. They know that to speak forthrightly on Vietnam’s shameful human rights record would threaten their easy access to senior communist officials. Their corporate benefactors who depend upon that political access to win lucrative business contracts in Vietnam could lose the big bucks.
Moreover, Vietnam’s ambassador to the United States has a team of $30,000-a-month Washington lobbyists on his payroll. Their assignment is basically not to let awkward questions about political prisoners interfere with enhanced U.S.-Vietnamese commercial- and security ties, especially the sale of lethal weapons to fend off Chinese maritime intimidation.
One wonders what Dieu, Hoa, and Binh, locked away in their cells, would have to say — if they were free to speak.
Dieu, a devout Catholic citizen journalist, has been imprisoned since 2011. He committed the “crime” of exercising free speech. Dieu has been living “in hell” — beaten, humiliated, and treated like a “slave” for refusing to wear a uniform with the word “criminal” — his brother has told Radio Free Asia. Hoa, also a blogger whose crime was his free speech, has been incarcerated since 2011. Binh, a songwriter, lost his liberty in 2012. His crime was writing music that offended the Communist Party. While Binh’s term is scheduled to end next year, Dieu and Hoa could languish behind bars until 2024.
All three men are associated with the Viet Tan, a U.S.-based political party that is highly effective in using the social media to advocate democratic freedoms of speech and assembly. The Viet Tan reaches a wide audience, both inside Vietnam and in the Vietnamese diaspora. For its skilled high-tech advocacy, the Hanoi’s feared Ministry of Public Security brands Viet Tan as a “terrorist” organization.
Binh, Hoa and Dieu were amongst a group of 17 political prisoners who have been represented by Stanford law professor Allen Weiner, a former high-powered U.S. State Department official. Weiner won a United Nations panel determination that his clients — all either Viet Tan members, supporters or friends — had been unjustly imprisoned. While 14 of Weiner’s clients have been released, that’s unfortunately not quite a happy ending. “Some of those who have been released, however, continue to suffer severe harassment and intimidation at the hands of the Vietnamese security services,” Weiner reports. “They continue to pay a heavy price.”
That’s the sort of glaring injustice that no credible analyst of today’s Vietnam would want to downplay. Meet CSIS Asia analyst Murray Hiebert — a man who doesn’t deny that Vietnam has human rights issues, yet is careful never to use clear language that would anger senior Vietnamese officials.
Nine months ago, I brought Allen Weiner’s brave clients to Hiebert’s attention, asking if perhaps this would be an opportunity to highlight the injustice by holding a public forum. The CSIS analyst brushed off the inquiry — at the time I had not realized that CSIS has never held such an event. He also declined to say whether he agreed with Hanoi’s characterization of the Viet Tan as a “terrorist” organization.
(The White House and State Department are better informed than CSIS. Not only do they respect the Viet Tan for its peaceable advocacy, but Obama’s national security officials have maintained close ties with the Viet Tan leadership. Radio Free Asia reported that on May 17 representatives of the Viet Tan, along with other respected Vietnamese pro-democracy advocates including Boat People SOS and Vietnam for Progress, were briefed on Obama’s upcoming Vietnam trip in the White House on May 17.)
A few weeks ago, Hiebert once again did not respond to a request to be interviewed on the imprisoned Viet Tan supporters. I then tried to register for a May 17 press briefing that Hiebert and two other CSIS scholars held on the Obama visit. I had hoped to ask about Binh, Hoa and Dieu. But CSIS spokesman Andrew Schwartz — who also had not responded to a recent e-mail inquiry — denied me admission, asserting that the event was “oversubscribed.”
While the briefing room was indeed rather crowded, even full, according to people who were present, Schwartz found room for Vietnam Television. VTV is a Hanoi-controlled media tool that the Communist Party finds useful for spreading the party line. These days, VTV’s best “scoop” has been in warning Vietnamese independent journalists — and specifically the Viet Tan — to stay away from linking corrupt communist officials to a Taiwanese steel mill that somehow obtained environmental clearance to discharge toxic wastes into the sea, which has resulted in a massive fish kill.
(At the May 17 CSIS briefing, a Television Vietnam correspondent asked if the next American president would continue Obama’s “pivot” to Asia — which at least drew laughter. It is perhaps also worth noting that while “journalists” from Vietnam Television are welcome to peddle their propaganda in the United States, authorities in Hanoi continue to jam Radio Free Asia’s Vietnamese language service. And while the BBC is free to broadcast its English-language programs in Vietnam, the BBC’s celebrated Vietnamese Language Service frequently has run into problems.)
As it turns out, CSIS has a history of making life uncomfortable for guests at the think tank’s public events who might pose awkward questions. On May 24, 2015, former political prisoner Ha Vu angered the Vietnamese ambassador to the U.S., Pham Quang Vinh, by asking how Vietnam justified persecuting its political prisoners. Vinh, visibly upset, retorted that Vietnam has no political prisoners — which was pretty rich, considering that at that moment, the ambassador was busy trying to avoid making eye contact with one of Vietnam’s most famous political prisoners.
Moreover, CSIS analyst Hiebert, who chaired the panel, did not challenge the ambassador’s absurd claim. (The CSIS event discussed a study on U.S.-Vietnamese relations that Hiebert had co-authored; that study had not disclosed that the Vietnamese government had secretly financed it, Hiebert subsequently admitted to me.
And last July, Hiebert went to extraordinary lengths to accommodate Vietnamese security officials when Communist Party Secretary General Nguyen Phu Trong spoke at CSIS. Hiebert summoned a guard, escorting Dr. Binh Nguyen, a prominent Vietnamese-American physician, from the premises. Hiebert apologized to Binh, who had been invited, but said that the communist security officials insisted that she be ejected (for details see: How Hanoi Buys Influence in Washington, D.C., www.rushfordreport.com).
Turns out that there are other reasons to doubt Hiebert’s independence. While his official CSIS bio does not disclose it, Hiebert is also a senior advisor to a prominent business consultancy, the Bower Group Asia.
Hiebert’s boss at CSIS, Ernie Bower, runs the Bower Group Asia. “Our clients include the world’s best global enterprises,” the BGA website proclaims. “We understand the nexus between politics and economics.” Bower has more than 60 employees in his Washington, D.C. headquarters and in 21 Asian countries (including Vietnam). Another CSIS analyst, Chris Johnson, is a BGA managing director for China. Like Hiebert, Johnson does not disclose his business affiliations on his CSIS website.
Bower, who formerly chaired the CSIS Southeast Studies chair, responded angrily last year when I asked him which was his real day job: CSIS or his business consultancy. He said he was “saddened” that I had suggested he appeared to have conflicts of interest. But perhaps aware that others might also wonder, Bower now identifies himself on the CSIS website as a “non-resident” advisor. The chair remains vacant. CSIS spokesman Schwartz and John Hamre, the think tank’s CEO and one of Washington’s most acclaimed fundraisers, have not responded to persistent inquiries to explain the apparent conflicts.
Here’s how the conflict works:
At CSIS Hiebert has advocated the TPP trade deal. The Bower Group is actively seeking TPP business.
Hiebert has strongly contended that the U.S. lethal arms embargo on Vietnam has outlived its usefulness, and should be lifted. Lockheed, which wants to sell Hanoi its P-3 Orion and C-130 Hercules surveillance planes, has a seat on Hiebert’s CSIS board. So does Boeing, which has been peddling its P-8 Poseidon military surveillance aircraft in Hanoi. Imagine how the giant defense contractors would feel if the money they dole out to CSIS would be used to shine a spotlight on issues involving corruption and human-rights abuses in Vietnam.
Coca-Cola, a Bower Group client, got into Laos a few years ago, thanks to Ernie Bower’s understanding of “the nexus” between business and politics. Coke also has a seat on the CSIS Southeast Asia board.
Chevron, another major CSIS benefactor, also has a representative on CSIS’s Southeast Asia board. Hiebert authored a November 2014 column for the Wall Street Journal defending Chevron in bitter litigation the oil giant had in Indonesia. In his column, Hiebert identified himself only as a CSIS analyst. Then Ernie Bower got busy on the Bower Group’s Facebook page, touting the Journal piece: “BGA’s Murray Hiebert provides much-needed analysis of the court case against Chevron in Indonesia” in the Wall Street Journal. [Full disclosure: I have been an occasional contributor to the Wall Street Journal’s Asian edition for more than two decades.]
In recent months, Hiebert has been quoted widely by major news outlets including CNN, Reuters, the Associated Press, Forbes, Politico, the Financial Times, the Washington Times, and the Voice of America — always only identified as a CSIS analyst. Readers would not know that Hiebert also works for a business consultancy. They would not know that corporations that fund Hiebert’s CSIS programs have serious financial interests at stake. One wire-service report that quoted Hiebert about Vietnam’s new top leadership was picked up by the New York Times in April. This gave Ernie Bower another opportunity to twitter to his clients about how “BGA Senior Advisor Murray Hiebert” had made the pages of the Times.
And earlier today, CNN quoted Hiebert’s approving views of enhanced U.S. weapons sales to Vietnam, identifying him only as a CSIS scholar. Viewers were not aware that this “scholar” is funded at CSIS by major U.S. defense contractors, and has taken money from the Vietnamese government for co-authoring a study that called for the lifting of the U.S. weapons embargo to that country. Nor would viewers know that Hiebert also works for the Bower Group, which also touts its interest in facilitating arms deals.
A little digging illustrates how Bower mixes his CSIS affiliations with business. In 2014, for example, Bower opened some important doors in Washington to a Manila wheeler-dealer named Antonio “Tony Boy” Cojuangco. Tony Boy also sits on CSIS’s Southeast Asia board. Bower brought him to town as the head of an “eminent persons” group — such flattery can go a long way in certain Asian circles.
CSIS arranged appointments for the Filipino eminences in the White House, the Export-Import Bank, on Capitol Hill and of course at CSIS headquarters, where they had a scheduled appointment with the think tank’s president, John Hamre. That was during the day. That night, the Bower Group hosted a lavish dinner for Tony Boy and his associates at the posh Jefferson Hotel. Bower, Hiebert, Chris Johnson, and other CSIS/Bower Group operatives were present. To judge from photos I’ve seen, it was a good night all around, lubricated by bottles of Pomerol. (Hamre has not responded to repeated requests to comment. On the CSIS website, the CSIS head asserts that some unnamed journalists who have questioned CSIS ethical practices have ignored evidence to the contrary that he has provided.)
Agents of Influence
Speaking of influence peddling, if one looks closely, the Washington lobbyists on that $30,000-a-month retainer from Vietnamese Ambassador Vinh unwittingly illustrate how the official spin surrounding the Obama visit to Vietnam doesn’t tell the whole story.
The most recent foreign agent’s disclosure form that the Podesta Group has filed with the U.S. Department of Justice lists some of what the firm did to earn its $180,000 for the last six months of 2015. One is left wondering exactly what the lobbyists did to earn their keep.
The lobbyists disclosed only seven meetings, mostly with congressional aides. The only elected representative who met with Podesta representatives was Matt Salmon, an Arizona Republican who is retiring from Congress at the end of this year.
Rep. Salmon had already met with Vietnamese Amb. Vinh earlier in the year and had been to Vietnam in May. The congressman already had supported an enhanced U.S.-Vietnam trade relationship.
Do the math: $180,000 for seven meetings. That’s about $25,000 a meeting, throwing in about 50 e-mails and five phone calls that the Podesta lobbying form mentions. David Adams, the Podesta lobbyist who has been working to facilitate the Obama visit to Vietnam this week, is a former close aide to Hillary Clinton when she was secretary of state. Asked what he had really done to each the money, Adams declined to comment.
This week, when the television screens show images of happy Vietnamese peasants with their conical hats, toiling in their rice paddies, think of David Adams. The average Vietnamese citizen would have to work 13 years to earn enough money to pay for just one $25,000 Podesta Group meeting with congressional aides.
From the days of French colonialism to the present Communist kleptocracy, the Vietnamese central government has always stolen from its poorest people.
Amb. Vinh’s lobbyist Adams proudly styles himself as a part-time “gentleman farmer” in Virginia’s wine country. Wonder what those Vietnamese peasants would say, if they knew that their stooped labor is helping subsidize such a lifestyle?
A Gallup Poll this February reported that 57 percent of Americans view open trade positively. That’s certainly an improvement from surveys a few years ago, which found that far more of them believed in flying saucers (35 percent) than supported free trade (9 per- cent). Yet, Gallup found that 35 percent of the public – that’s some 100 million Americans – still see imports as an unambiguous threat to their jobs.
No wonder, considering that all recent American presidents, regardless of party, have had the same take on the benefits of trade: exports are good things, because they create jobs; job-threatening imports, we won’t talk about. George W. Bush, speaking in 2003 to an audience of importers and exporters at the Port of New Orleans, explained that the famous port existed to promote U.S. exports, avoiding any mention of the politically incorrect “i” word. And Barack Obama helped win a second term by skillfully tapping into fears of import competition. “I don’t want to buy stuff from someplace else,” he said, vowing to spark a U.S. manufacturing renaissance by doubling exports by 2014. Audiences cheered when Obama told them that his three favorite words were “made in America.”
Come again? The mercantilist political premise – we want to sell our products to for- eigners and buy as little from them as possi- ble – is a ticket to stagnation and conflict. In- deed, rapidly evolving trade patterns have scrambled who does and who doesn’t benefit from imports, putting many opponents of open trade in the position of undermining their constituents’ long-term interests – in ef- fect, cutting off American workers’ noses to spite their faces.
In the 21st century, imports are as vital to the health of American manufacturing as the coronary artery is to the health of the human heart. Nearly two-thirds of the $2-trillion- plus worth of U.S. imports are component parts and raw materials that sustain Ameri- can jobs. If you want to export more manu- factured goods, you’ll need to import more components. “Manufacturing in today’s world of interdependent global supply chains,” Pascal Lamy, the director-general of the World Trade Organization, explains, “is no longer just about products made in the U.S.A., or France or China – but ‘made in the world.’”
Lamy’s reasoning is supported by solid re- search. Economists at the Word Trade Orga- nization, working with their colleagues from the Organization for Economic Cooperation and Development, have created sophisticated databases that show how global supply chains (sometimes called value chains) dominate just about all manufacturing. Sweden’s Na- tional Board of Trade has published research that translates this data into common sense terms. Thus, for example, about half of a Volvo’s value is added by parts imported from the United States, Japan, England, Canada and Argentina. So, while Volvos may be less Swedish these days, the supply chain that al- locates component acquisition according to what individual economies do best makes it possible to do a fair share of the manufacturing in high-wage Sweden.
locking in economic logic
To be sure, neither of the 2012 presidential candidates could be accused of walking an extra mile to enlighten the public on the job- sustaining role of imports. Mitt Romney’s most relevant utterance was a promise that, on his first day in the Oval Office, he would roll back imports from the “cheating” Chinese. Romney also accused his Democratic opponent of having been “asleep” on promoting job-creating U.S. exports.
Obama definitely didn’t look sleepy when he reminded American audiences that, with trade, employment was priority No. 1. “It’s time to stop rewarding companies that ship jobs overseas, and start rewarding companies that are creating jobs right here in the USA,” Obama told the cheering workers at the Mas- ter Lock Company in Milwaukee.
Master, which for nearly a century has made the iconic locks that adorn so many high-school lockers, had come to Obama’s attention when it moved about 100 jobs back to Wisconsin from China. The president got the point that supply chains matter; when businesses like Master Lock create new American jobs, he explained, “it’s also good up and down the supply chain, because if you’re making this stuff here, that means that there are producers and suppliers in and around the area who have a better chance of selling stuff here.” But he neglected a critical extension of the argument – that supply chains ignore borders.
Two days later, Obama was in Everett, Wash., where he visited the assembly line for Boeing’s new 787 Dreamliner, which he called “the world’s most advanced commercial air- plane.” “Companies like Boeing,” Obama pro- claimed, “are realizing that even when we can’t make things cheaper than China, we can make things better. That’s how we’re going to compete globally.”
While Dreamliners are made in Washing- ton State, the entire U.S. economy gets a boost, thanks to “nearly 11,000 small, medium and large supplier businesses,” the economist-in- chief explained. “Boeing has suppliers in all 50 states, providing goods and services like the airplanes’ groundbreaking carbon-fiber- composite aircraft structure from Kansas, ad- vanced jet engines from Ohio, wing compo- nents from Oklahoma, and revolutionary electro-chromic windows from Alabama,” he said. Again, though, he stopped short of ac- knowledging the role of imports in the mix.
The following month, Obama visited a Rolls-Royce plant in Petersburg, Va. that makes jet engines for the Dreamliner. The president praised the venerable British manufacturer for investing in America. It is “creating jobs here, manufacturing components for jet engines, for planes that we’re going to send all around the world,” he declared. What Rolls- Royce has been doing in the United States rep- resents “the kind of business cycle we want to see,” Obama stressed. “Not buying stuff that’s made someplace else and racking up debt, but by inventing things and building things and selling them all around the world stamped with three proud words: ‘Made in America.’”
Well, sort of. It doesn’t take any special eco- nomic insight to see how global supply chains sustain the jobs of Americans who make locks, airplanes and jet engines. Just consider their provenance.
where do master locks come from?
Master Lock’s signature products are composed of a dozen or so parts, notably cylinders, ball bearings, shackle pins and screws. In 1995, the last year for which publicly available documentation is found in U.S. Customs’ re- cords, 9 of the 11 parts used in one of Master’s locks were made in Milwaukee. But the lock case and cylinder-retainer block were imported from Taiwan – and those two parts constituted an estimated quarter to a third of the production cost of the finished lock.
In Milwaukee, Master Lock now employs more than 400 workers, including the workers in the 100 jobs repatriated from China. The company has another 700 workers in Nogales, Mexico. The Milwaukee and Mexican plants account for about 55 percent of the company’s lock production, with the remainder still in China. These Chinese, American and Mexican workers depend upon each other so much to complete the supply chain that it is often difficult to say which country really makes the locks. Indeed. In 2010, U.S. Customs officials struggled to determine where one of Master Lock’s products really was made. It had ten components, of which the principal ones, the lock body and the shackle, were made in Milwaukee and China, respectively. All of the components were then assembled in Mexico. Customs finally decided the finished padlock should be marketed as a product of Mexico – a judgment call that reflects political and bureaucratic imperatives more than reality.
Other times, Master Lock has imported the lock bodies and shackle assemblies from Asia or Mexico, with workers in Milwaukee finish- ing the product by attaching the cylinder locks. Those padlocks were labeled “Made in USA.” (As a chastened Karl Marx might have quipped if he were alive today: “Workers of the world: you really are united.”)
It’s the same story for Boeing’s Dreamliners, which Obama praised for having supply chains that stretched to all 50 states. The Swedish National Board of Trade estimates that 70 percent of the Dreamliner’s components are produced outside the United States, with suppliers “spread over 135 sites around the world.” In fact, the board said, “the wings are produced in Japan, the engines in the United Kingdom and the United States, the flaps and ailerons in Canada and Australia, the fuselage in Japan, Italy and the United States, the horizontal stabilizers in Italy, the landing gear in France, and the doors in Sweden and France.”
When Obama toured the Rolls-Royce engine plant near Richmond, “I learned a bit about how a jet engine comes together,” he told the workers there. The president drew appreciative chuckles when he added, “I’m a bit fuzzy on some of the details.”
But the president insisted he was clear on one principle: the virtues of a buy-American world. “Think about how important this is,” he said. “I mean, imagine if the plane of the future was being built someplace else.”
But while we’re in an imagining mood, re- flect on how the jobs of those Americans who make jet engines in Virginia would fly away if the plant lacked easy access to imported com- ponents. For example, the Rolls-Royce AE 3007 gas-turbine engine – a workhorse in short- haul passenger jets – requires titanium fittings imported from “unspecified” countries, U.S. Customs records show.
Those engines also need fire-resistant braided cord that ties bundles of electric cables together, which is imported from England. There are also stainless steel oil-seals and bolts from Great Britain, and stainless steel gravity tanks from Sweden. Imported socket screws, shaft liners and sleeves for thruster-propulsion systems from Finland, Sweden and Norway (and machine screws from too many countries to mention) keep Rolls-Royce’s Virginia workers busy.
Throughout the presidential campaign, Obama wrapped himself in the flag of eco- nomic nationalism without saying much about imports. And the shtick worked. Rom- ney tried his best to turn the tables, calling Obama the true “outsourcer-in-chief ” for hav- ing spent federal stimulus funds on American manufacturers who had been making wind turbines from – horrors! – imported blades. But it apparently didn’t quite resonate. (And it didn’t advance the candidate’s buy-American credentials when it came out that his wife had been flying around the country on a chartered regional jet made in Canada.)
Obama’s first-term, five-year goal of doubling U.S. exports of goods, which totaled $1.07 trillion in 2009, remains a worthy objective. To accomplish that, the president is busy tout- ing the usual policy mix: trade missions, in- vestment in infrastructure and breaks for small businesses. In his 2013 State of the Union message, the president announced that he would like to create 15 “manufacturing hubs” around the country. He also wants Congress to give the Defense and Energy Departments $1 billion, “to turn regions left behind by globalization into global centers of high- tech jobs.”
Ironically, though, the president’s national export initiative has pretty much ignored one federal program that has a highly successful record in promoting American exports. In fact, expansion of U.S. foreign-trade zones – which revolve around cheap access to imports– weren’t even included in the Obama export- doubling program.
Foreign-trade zones have been around since the Great Depression, when Congress and President Franklin D. Roosevelt were scrambling for ways to keep Americans work- ing by getting around the crippling Smoot- Hawley tariffs that hovered in the 50-plus percent range.
Manufacturers in these special zones – ad- ministered by the Commerce and Treasury Departments – were allowed to import the raw materials and components to manufac- ture finished products without initially paying import duties. The goods could then be sold in the United States, where they would be sub- ject to the lower U.S. duty rate for the finished product. Or they could be exported to other countries without paying any U.S. tariffs.
That model for stimulating exports is still in place. These days, some 2,800 companies em- ploying more than 340,000 American workers operate in such zones in every state of the union. And talk about results: from 2004 to 2008, the value of exports from U.S. foreign- trade zones more than doubled, from $19 bil- lion to $41 billion. Since 2009, they are up by more than 80 percent.
Moreover, these zones operate in parts of the country that have lagged behind in the rapidly evolving economy. BMW has ex- ported more than one million spiffy roadsters and four-wheel-drive vehicles from the free- trade zone in Spartanburg, S.C. since 1994. Mercedes exports its M-class SUVs and other luxury vehicles from a duty-free zone in Ala- bama. Meanwhile, Toyota recently announced it will be selling its Kentucky-made Venza crossover to customers in Russia and Ukraine.
Another shining export success originates in Elkton, Va. (pop. 2,700), nestled in the Shenandoah Valley about 100 miles south- west of Washington. There, pharmaceutical giant Merck operates a sprawling factory that makes drugs to treat diseases from HIV to river blindness to Parkinson’s to cervical cancer. In a story that should now be familiar, the Merck plant depends on cheap imports, pay- ing no U.S. tariffs on the imported raw mate- rials – various chemicals, gums, resins – that otherwise would be subject to duties.
Nonetheless, it remains an uphill battle to beat back opposition to foreign-trade zones. The United Auto Workers opposes them – especially those in the South that use non- union labor. Detroit automakers, which have in the past operated from U.S. foreign-trade zones, no longer serve as a counterweight. Thanks to the North American Free Trade Agreement, General Motors can make its Silverados and Suburbans in Mexico and export them duty-free to the United States. The foreign automobile manufacturers that operate in foreign-trade zones in the rural South have to pay normal U.S. tariffs on automobiles if they sell their cars in the United States (as op- posed to exporting them).
When Obama became president in 2009, he was offered the opportunity to support an idea aimed at boosting the number of jobs of Americans who work in foreign-trade zones. Representative Bill Pascrell, a New Jersey Democrat, was pushing legislation that would have put the Americans who make BMWs in South Carolina on an equal footing with GM’s Mexican workers by exempting domes- tic sales of autos made in free-trade zones from the regular tariff.
But Obama, loath to challenge the auto workers’ union, refused to support Pascrell’s proposal. Nor did any major Republican show much interest. Even Pascrell decided not to speak in favor of his own bill, which he quietly dropped.
Though polls show a majority of Americans are inclined to accept global economic integration, politicians see little advantage in of- fending the vociferous third who are still demonizing imports. That’s why both Republican and Democratic bigwigs decline to explain the relationship between exports and imports in intellectually honest terms.
But corporate CEOs don’t have that excuse. And many of America’s top business leaders – who certainly know better – have refused in recent years to acknowledge the vital role that imports play in keeping domestic jobs, preferring to invest their political capital on other issues. U.S. steelmakers, to cite the most glaring example, know that their American workers cannot make finished steel products without access to duty-free imports of semi- finished steel. Yet presidential candidates who want to win votes in steelmaking states like Pennsylvania and Ohio long ago learned not to rock that particular political boat.
The more encouraging news is that some influential trade groups have begun to speak candidly about the role of imports in the U.S. manufacturing supply chain. For the past two years, the U.S. Chamber of Commerce has been supporting an Imports Work For America week. The Business Roundtable –- not so long ago a bastion of anti-imports sentiment –- recently posted a study by Matthew Slaughter, a Dartmouth economist, that praises the contributions of imported goods to U.S. manufacturing.
“Exports are great for Caterpillar, but so are imports, and that’s a point that often gets overlooked,” Doug Oberhelman, Cat’s chief executive and the head of the Roundtable’s task force on trade, said. “Without access to manufacturing inputs from around the world, Caterpillar’s global supply chain would be less competitive and our ability to compete in all markets would be diminished.”
Free trade has always been controversial because it produces both winners and losers, even though the evidence that open trade promotes innovation, retards inflation and increases consumer-centric competition is undeniable. But with the economy changing, the exports-good/imports-bad mantra is less and less relevant to groups traditionally op- posed to free trade. The more the American public hears the simple truths about why im- ports are good things, the sooner the politics of trade will cease to be dominated by interests stuck in the 1980s.